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World

Populist Argentine government cuts energy subsidies as it runs out of central bank reserves

Associated Press
Published | Updated
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    Teachers chant slogans during a demonstration in front of the Ministry of Education in Buenos Aires, Argentina, Wednesday, March 26, 2014. Striking teachers in the Buenos Aires province are demanding a wage increase higher than what is currently being offered by the provincial administration. The strike is in its 15th day, affecting more than 3 million students. (AP Photo/Victor R. Caivano) (The Associated Press)

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    Image 2 of 3

    Teachers chant slogans as they march to the Ministry of Education in Buenos Aires, Argentina, Wednesday, March 26, 2014. Striking teachers in the Buenos Aires province are demanding a wage increase higher than what is currently being offered by the provincial administration. The strike is in its 15th day, affecting more than 3 million students. (AP Photo/Victor R. Caivano) (The Associated Press)

  • ee6df7cf-
    Image 3 of 3

    Teachers chant slogans as they march to the Ministry of Education in Buenos Aires, Argentina, Wednesday, March 26, 2014. Striking teachers in the Buenos Aires province are demanding a wage increase higher than what is currently being offered by the provincial administration. The strike is in its 15th day, affecting more than 3 million students. (AP Photo/Victor R. Caivano) (The Associated Press)

BUENOS AIRES, Argentina – Argentina is cutting subsidies to survive a cash crunch. As a result, many people could see water and gas bills double.

Economy Minister Axel Kicillof says the populist government is sticking with its model of transferring wealth to help the poor and stimulate the economy. But it can't afford to keep paying 80 percent of everyone's basic services.

Exempted for now are factories and poor people, as well as people in the extreme south and north of Argentina.

That leaves businesses and middle- and upper-class consumers. They must reduce consumption by 20 percent to avoid paying higher bills.

Argentina already suffers nearly the world's highest inflation, at 55 percent a year. But planning minister Julio de Vido says the cuts won't be inflationary because people will use energy more rationally.